Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

The member banks of the FRS/ FED are floating on free interest paid on the backs of the people who pay the note or diluted saved currency to their imaginary credit float-medium creation. Like HFT haircut machines they are taking micro-slices of embedded investors in 401-Ks and pension money and annuities all de live-long day. Soon the FinReg bill of 2,000 plus pages will fix everything!!
“When in the Course of human events it becomes necessary….”

Everything is based on faith. Take money. It doesn’t matter what you use for money–gold, silver, green paper, puka shells–there’s no inherent value in gold. In fact, you really can’t do much with gold (iron is a more useful metal). People use gold as a store of value only because they have faith that it’s going to be worth something to the next guy.

Faith in gold is different because, for whatever reason (call it greed, call it totemism, call it whatever you want), that faith has proven unflappable throughout human history. It was valuable in ancient Egypt and Rome. It was valuable during the Dark Ages. It was valuable during the Renaissance and the Enlightenment and the Gilded Age and basically any other era you can point to. This is certainly more than can be said for the pharaohs’ and caesars’ versions of fiat currencies or whatever bonds they may have issued promising to pay it.

You say iron is a much more useful metal, but how do you know this? Because people build bridges and appliances and weapons and all other sorts of things with it. In other words, iron is useful for all these purposes to which people have applied it. Can the same not be said of gold and its use as money by nearly every society whose governments have not tried to drive it underground and demonetize it?

The exact reasons for gold’s historical role as a store of value are much less interesting to me than the undeniable evidence that it nearly always has been a store of value, at least since the advent of agriculture. Even when FDR thuggishly confiscated it, his administration did not see fit to simply take the supposedly demonetized contents of Fort Knox to the nearest landfill.

More to the point, gold is especially appealing to societies which have lost confidence in their ruling elites and their promises to socially engineer a brighter future … especially via the typical awful sledgehammer techniques of monetary manipulation and inflation, to which you are often seen writing approving hosannas on BR’s comments pages.

I am no gold bug and in fact I’m quite bearish on its dollar price for the near future, since we’re in a period of severe credit deflation which our leaders a.) helped cause, b.) do not understand, and c.) have no power to prevent. So, for the moment, the bulk of my “gotta keep it safe money” will stay in T-bills. But I think it requires an almost belligerently blinkered view of history to believe that gold has no use as money or a store of value, and that it will never be used as money again in the future.

“Everything is based on faith.” Yeesh … ever tried writing a computer program that way?

First, in the case of the U.S., only Congress can coin money, so gov’t gets money from the Treasury, not by borrowing from banks. Borrowing would mean paying interest, and why pay interest to make someone else rich when you are the one who is creating the money?
Second, it implies that banks are not independent of gov’t influence in their actions, which is clearly wrong because we have been told so on numerous occasions.
Finally, the sharks aren’t just in the water because there are Land-sharks.
Just so wrong in so many ways.

Gold is good for survival and fiat currency metric, but brings no solutions to the table. Mankind thrives on Intellectual Property. To mine and then re-bury gold is nothing new but an act of desperation. Can you help?

cnbc’s when lehman failed is a good 45 minutes, pretty interesting, apparently behind the scenes, six months before the crash paulson was trying to save the world and finally had had enough and said screw it……………………………

in a sense u could actually say paulson was a hero, he put the fear of god into there idicoy of unlimited moral hazard

Some banks are becoming dangerously addicted to the medicine the ECB has been administering. They can easily borrow from the ecb and then invest the proceeds in higher-yielding government bonds. Mr Ryan of UBS, reckons this “carry trade” may account for as much as 40% of the profits posted by some smaller Spanish banks and 20% at bigger ones.

The funding constraints for European banks are having an impact on asset prices and liquidity. Firstly, peripheral sovereigns are becoming increasingly dependent on their domestic banks to absorb new issuance while banks are increasingly dependent on sovereign support. The feedback loop has been highlighted a number of times in the past few months as a ratings downgrade of a sovereign is followed by a ratings downgrade of a number of domestic banks.

“When in the Course of human events it becomes necessary….” to demand the interest that FRS each member banks accrue from debt increase and paid by customers for said debt against the public balance sheet to be credited to retire that same balance sheet debt. The incentive to print would have its own active suspension forcing it back on the track. The FED would devolve to a domestic GNP algorithm with plus 2-3% per annum currency growth. I’m thinking the bankster battles Jackson, Lincoln, Garfield, Kennedy fought…nothing is new, just the scoundrels have shown their natural hand.

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About Barry Ritholtz

Ritholtz has been observing capital markets with a critical eye for 20 years. With a background in math & sciences and a law school degree, he is not your typical Wall St. persona. He left Law for Finance, working as a trader, researcher and strategist before graduating to asset managementRead More...

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